BPKD.L Regulatory News (BPKD)

16 Nov 2006 11:44

Bank Pekao SA16 November 2006 This document is a nonbinding translation for convenience purposes of the Polishoriginal. In the event of any discrepancies between the English and Polishversions, the original Polish version shall prevail. Spin-off Plan of Bank BPH Spolka Akcyjna dated November 15, 2006 agreed upon by and between: Bank Polska Kasa Opieki Spolka Akcyjna, with its registered seat in Warsaw, at53/57 Grzybowska St. (hereinafter referred to as "Pekao S.A."), incorporatedunder entry No. KRS 0000014843 in the Register of Entrepreneurs maintained bythe District Court for the City of Warsaw, XII Commercial Department of theNational Court Register, as the taking over Company, represented by JanKrzysztof Bielecki, President of the Management Board, and Luigi Lovaglio,Vice-President of the Management Board; and Bank BPH Spolka Akcyjna, with its registered seat in Krakow, at Al. Pokoju 1(hereinafter referred to as "BPH S.A."), incorporated under entry No. KRS0000010260 in the Register of Entrepreneurs maintained by the District Court forthe City of Krakow-Srodmiescie, XI Commercial Department of the National CourtRegister, as the divided Company, represented by Jozef Wancer, President of theManagement Board and Grzegorz Piowar, Member of the Management Board; hereinafter referred to collectively as the "Companies" (and each of theCompanies referred to individually as a "Company"). Acting under Art. 533 Ss1 and Art. 534 of the law of September 15, 2000, theCommercial Companies Code (Journal of Laws No. 94, item 1037, as amended,hereinafter referred to as the "CCC"), in connection with the intention tointegrate BPH S.A. with Pekao S.A., effected in the manner of BPH S.A.'sspin-off through the transfer of a part of its property, in the form of anorganized part of the enterprise, to Pekao S.A., the Management Boards of PekaoS.A. and BPH S.A. hereby agree the following Spin-off Plan. Part I General provisions 1. Type, corporate name and registered seat of the Companiesparticipating in the spin-off 1.1. Taking over Company: Bank Polska Kasa Opieki Spolka Akcyjna, with its registered seat in Warsaw,incorporated under entry No. KRS 0000014843 in the Register of Entrepreneurskept by the District Court for the City of Warsaw, XII Commercial Department ofthe National Court Register. 1.2. Divided Company: Bank BPH Spolka Akcyjna, with its registered seat in Krakow, incorporated underentry No. KRS 0000010260 in the Register of Entrepreneurs kept by the DistrictCourt for the city of Krakow-Srodmiescie, XI Commercial Department of theNational Court Register. 2. Method of Spin-off 2.1. The spin-off of BPH S.A. shall be effected by virtue of Art. 529Ss1 item 4 of the CCC, i.e. by the transfer of a part of BPH S.A.'s property toPekao S.A. in return for shares in Pekao S.A., which shall be taken up by theshareholders of BPH S.A. 2.2. The description of the separated components of BPH S.A.'sproperty (assets and liabilities) and permits, concessions and relieves grantedto BPH S.A., which shall be transferred to Pekao S.A. is set forth in Part II(Description of components of property, permits, concessions and relieves vestedin Pekao S.A.) to this Spin-off Plan. The separation of BPH S.A.'s property waseffected as at October 1, 2006. A pro-forma breakdown comprising the assets andliabilities that have been assigned to Pekao S.A. as part of the spin-off, madeon October 1, 2006, is attached as Table 1 to this Spin-off Plan. All of thecomponents of BPH S.A.'s property (including the receivables and obligations)which are not attributed to Pekao S.A. in this Spin-off Plan shall remain withBPH S.A. 2.3. The principles governing the changes in the property assigned toPekao S.A. after October 1, 2006 until the spin-off date as defined in Art. 530Ss2 of the CCC (the "Spin-off Date") are as follows: 2.3.1. The components of BPH S.A.'s property (assets and liabilities)acquired or obtained in exchange for the components of property attributed toPekao S.A. in this Spin-off Plan, shall be attributed to Pekao S.A. Thecomponents of property acquired or otherwise obtained in exchange for theproperty not assigned to Pekao S.A. shall be attributed to BPH S.A. 2.3.2. Other components of property acquired or obtained by BPH S.A. shallbe allocated to the Company to which the Spin-off Plan attributes the componentsof property with which the newly acquired or obtained assets or liabilities areconnected. In particular, any components of property acquired or obtained by BPHS.A. functionally related to the business of the Transferred Units (as definedin Part II, Section 1 of this Spin-off Plan) shall be attributed to Pekao S.A. 2.3.3. Any material changes in the components of BPH's property referred toin Sections 2.3.1-2.3.2 above shall be separately monitored for the propertyassigned to Pekao S.A. and the other property of BPH S.A., and shall bereflected in the financial statements covering the property components assignedto Pekao S.A., to be made on the day immediately preceding the Spin-off Date. 2.3.4. From the execution date of this Spin-off Plan until the Spin-offDate, the Companies shall conduct their business in such a manner as to avoidchanging the structure of the balance sheet, or the economic value or the riskprofile of the part of BPH S.A.'s property assigned to Pekao S.A., or theeconomic value and the risk profile of Pekao S.A., except for changes resultingfrom the ordinary course of business. 2.4. The spin-off of BPH S.A. shall be performed without decreasingits share capital. The spin-off shall be financed from BPH S.A.'s own capitalsother than its share capital. The spin-off of BPH S.A. shall be accompanied by asimultaneous increase in Pekao S.A.'s share capital by PLN 94,763,559(ninety-four million, seven hundred and sixty-three thousand, five hundred andfifty-nine), up to PLN 261,571,816 (two hundred and sixty-one million, fivehundred and seventy-one thousand, eight hundred and sixteen), through a publicoffering and issue of 94,763,559 (ninety-four million, seven hundred andsixty-three thousand, five hundred and fifty-nine) I-Series ordinary bearershares, with a par value of PLN 1.00 (one) each (the "Spin-off Share Issue"). 2.5. Pekao S.A shall undertake relevant actions to have the Spin-offShare Issue introduced to trading on the regulated market conducted by theWarsaw Stock Exchange (the "WSE"), and in particular shall submit to theFinancial Supervisory Commission (Komisja Nadzoru Finansowego) a relevantinformational document pursuant to the Law of July 29, 2005 on Public Offeringsand the Terms and Conditions of Introducing Financial Instruments to anOrganized Trading System and on Public Companies (Journal of Laws No. 184, Item1539, as amended), and shall also submit a motion to conclude an agreement toregister the Spin-off Share Issue at the National Depository of Securities(Krajowy Depozyt Papierow Wartosciowych S.A.) (the "NDS") and a motion to theWSE to introduce the Spin-off Share Issue to regulated trading. Pursuant to theabove, it is planned that Pekao S.A.'s General Meeting, in its resolution on theintegration of Pekao S.A. with BPH S.A. performed by the spin-off of BPH S.A.through the transfer of a part of BPH S.A.'s property in the form of anorganized part of an enterprise to Pekao S.A., shall authorize Pekao S.A.'sManagement Board to enter into an agreement to register the Spin-off Share Issuewith the NDS, and shall include other provisions connected with introducing theSpin-off Share Issue to the regulated trading, if required by the regulationsbinding on the day the resolution regarding the integration of the Companies isadopted. 2.6. The share premium obtained while issuing the Spin-off ShareIssue above their nominal value shall be allocated to Pekao S.A.'s supplementarycapital. 3. Share Allocation Ratio 3.1. The methods used in order to determine the share allocationratio are as follows: - Trading Market Multiples Analysis; - Regression Analysis; - Dividend Discount Model. Trading Market Multiples Analysis The trading market multiples methodology is based on an analysis of the stockmarket valuations of a sample of banks deemed comparable to the bank beingvalued, and the application of comparables' stock market multiples (e.g. price/earnings), deemed to be relevant in the sector analyzed, to the stock marketmultiples of the bank being valued. Regression Analysis The regression analysis methodology is based on the assumption of a linearstatistical correlation between the stock market valuations, as measured bycertain stock market multiples deemed significant in the sector analyzed (e.g.price/book value), and the expected future profitability (e.g. return on averageequity) for the sample of comparable banks analyzed. Dividend Discount Model ("DDM") The DDM methodology assumes that the equity value of a bank is equal to the sumof: - the discounted value of future cash flows generated over a certain timeperiod and distributable to shareholders (i.e. dividends), in excess of a targetcapital base deemed necessary to sustain the future activities of the bank inaccordance with the regulatory requirements; and - the terminal value, discounted to the valuation date, calculatedapplying a perpetual growth rate to the cash flow of the last year ofprojections. 3.2. The above methodologies are standard and the most frequentlyused with respect to financial institutions. 3.3. The exchange ratio according to which the shareholders of BPHS.A. shall take up shares in Pekao S.A. as a result of possessing BPH S.A.'sshares determined on the basis of the valuation of the Companies is 1: 3.3 (the"Share Allocation Ratio"), which means that each shareholder of BPH S.A. shallreceive, as a result of its possession of each BPH S.A. share, 3.3 shares in theSpin-off Share Issue, while maintaining its hitherto shareholding in BPH S.A.The Share Allocation Ratio has been specified in accordance with the value ofBPH S.A.'s property determined for the spin-off purposes, pursuant to Art. 534Ss2, Item 3 of the CCC, according to the status as of October 1, 2006. 3.4. In preparing the Spin-off Plan, the Management Board of BPH S.A.has taken into account the opinion of the investment bank J.P. Morgan plcregarding the accuracy and reliability of the Share Allocation Ratio. In turn,the Management Board of Pekao S.A. has taken into account the opinion of theinvestment bank Merrill Lynch regarding the accuracy and reliability of theShare Allocation Ratio. 3.5. Due to the impossibility of issuing fractional shares, shouldthe application of the Share Allocation Ratio result in the number of sharesassigned to individual BPH S.A. shareholders taking part in the spin-off to be anumber other than an integer, the number of the Spin-off Share Issue sharesissued to such shareholders shall be rounded down to the nearest integer, and inreturn for the fractional part of the Spin-off Share Issue share to which it isentitled, such shareholder shall receive a cash payment calculated according tothe formula presented in Section 4.3. 4. Rules governing the allocation of the Spin-off Share Issueshares to the shareholders of BPH S.A. 4.1. The Spin-off Share Issue shares shall be assigned to theshareholders of BPH S.A. through the intermediation of the NDS, according to theownership status of BPH S.A.'s shares as of the date which pursuant to thebinding regulations shall be indicated as the reference day (the "ReferenceDay"). The persons eligible to receive the Spin-off Share Issue shares shall bepersons in whose securities accounts BPH S.A. are be registered as of theReference Day. The Management Board of Pekao S.A. shall be authorized toindicate the Reference Day to the NDS. 4.2. The number of the Spin-off Share Issue shares to be received byeach BPH S.A. shareholder shall be determined by multiplying the number of BPHS.A. shares held in the securities account by each BPH S.A. shareholder on theReference Day by "3.3", according to the Share Allocation Ratio set forth inSection 3.3., and shall be the product of such multiplication, rounded down tothe nearest integer if such product is not an integer. 4.3. Each BPH S.A. shareholder who on the Reference Day holds in agiven securities account the number of BPH S.A. shares which as a result ofmultiplying such number of shares by "3.3" yields a fractional number, to berounded down to the nearest integer in accordance with Section 4.2, shallreceive an additional cash payment from Pekao S.A., calculated according to thefollowing formula: D = (A x 3.3 - B) x c, where: D is the amount of the additional payment; A is the number of BPH S.A. shares held in a given securities account by theshareholder on the Reference Day; B is the quantity of the Spin-off Share Issue shares to be issued to the givenshareholder after rounding the product of the number of BPH S.A. shares heldthereby by the Share Allocation Ratio down to the nearest integer; c is the value of one Spin-off Share Issue share, determined for the purposes ofadditional payments equal to the average market price per one share of PekaoS.A. for the consecutive 30 (thirty) days of listing preceding the ReferenceDay; the average market price shall mean the arithmetical mean of average dailyprices weighed by turnover volume. The amount shall be rounded down to PLN 0.01 after taxation. BPH S.A. shareholders that hold BPH S.A. shares registered in more than onesecurities account should take into consideration that the rules regarding theallocation of Spin-off Share Issue shares as described above shall be appliedseparately with respect to the shares registered in each of their accounts. 4.4. The additional payments shall be disbursed from Pekao S.A.'ssupplementary capital. The additional payments calculated according to the aboveformula shall be decreased by the amount of advanced (zryczaltowany) income taxif required in accordance with the provisions of law. The additional paymentsshall be disbursed to the entitled persons through the intermediation of theNDS. 4.5. The Management Boards of both Companies propose that PekaoS.A.'s Management Board shall be authorized to dispose of the Spin-off ShareIssue shares which are not allotted to BPH S.A.'s shareholders due to theapplication of the abovementioned rules on share allotment, to other entitiesselected by it. 4.6. Upon the execution of the spin-off, Pekao S.A.'s shareholdingstructure shall be as follows: - shareholders of BPH S.A. shall hold approximately 36.2% of shares; - the existing shareholders of Pekao S.A. shall hold approximately 63.8% ofshares. After the spin-off, BPH S.A.'s shareholding structure shall not change. 5. The date from which the Spin-off Share Issue shares arevested with the rights to participate in the profits generated by Pekao S.A. The Spin-off Share Issue shares shall entitle their holders to participate inPekao S.A.'s dividends disbursed from January 1, 2008. 6. Rights assigned by Pekao S.A. to the shareholders of BPHS.A. and persons vested with special rights in BPH S.A. BPH S.A. has no shareholders or other persons vested with special rightsreferred to in Art. 304 Ss2 item 1, Arts. 351-355, Art. 361 and Art. 474 Ss3of the CCC. No BPH SA shareholder or any other person shall be granted any special rights byPekao S.A. in relation to the BPH S.A. spin-off and the Spin-off Share Issue inexchange for BPH S.A.'s property transferred to Pekao S.A. 7. Special benefits to members of the governing bodies of theCompanies participating in the BPH S.A. spin-off, as well as to other personsparticipating in the BPH S.A. spin-off No members of the governing bodies of the Companies participating in BPH S.A.'sspin-off or any other person taking part in the spin-off shall be vested withany special benefits. 8. Amendments to Pekao S.A.'s Statute In relation to the integration of Pekao S.A. with BPH S.A. in the mannerdescribed herein, Pekao S.A.'s Statute shall be amended according to AttachmentNo. 3 hereto. 9. Permits and Consents of Administration Bodies andSupervisory Bodies to the spin-off of BPH S.A. Due to the fact that, pursuant to Art. 124c Item 2 of the Law of August 29, 1997(Journal of Laws from 2002, No. 72, Item 665, as amended), a bank may bespun-off only upon obtaining the permission of the Banking SupervisionCommission, the BPH S.A. spin-off shall be conditional upon obtaining suchpermit from the Banking Supervision Commission. Furthermore, in connection with the public offering of the Spin-off Share Issueshares and the intention to apply for their admission to trading on theregulated market referred to in Section 2.5 above, the relevant informationaldocument prepared according to the provisions of the Law on Public Offerings,Conditions Governing the Introduction of Financial Instruments to OrganizedTrading and Public Companies shall be subject to assessment by the FinancialSupervisory Commission. The conduct of the public offering of the Spin-off ShareIssue shares and applying for their admission to trading on a regulated marketon the basis thereof shall be subject to the opinion of the FinancialSupervisory Commission. 10. Miscellaneous provisions 10.1. As part of the spin-off, the Companies may enter into agreementsregulating certain detailed aspects thereof, such as: (i) Pekao S.A.'s use ofselected components of BPH S.A.'s property, and BPH S.A.'s use of selectedcomponents of its property assigned to Pekao S.A. for a certain period of timefollowing the Spin-off Date, in order to sustain the business and functioning ofboth Companies and provide their clients with seamless services after theSpin-off Date; (ii) the transfer to Pekao S.A. of the receivables andliabilities or other rights and obligations that are assigned herein to PekaoS.A., but which are not transferred to Pekao S.A. by operation of law upon theregistration of the spin-off; (iii) cooperation between the Companies withrespect to conveying BPH S.A.'s property allocated to Pekao S.A. and the relateddocuments to Pekao S.A., as well as other agreements that the Companies may deemnecessary to implement the spin-off and provide seamless services to clientsafter the Spin-off Date. 10.2. BPH S.A. shall be obliged to transfer to Pekao S.A. the componentsof BPH's property allocated to Pekao S.A. as well as any and all property ofthird parties, including movables and securities, which are in the possession ofBPH S.A. and which are necessary for the proper and timely execution of PekaoS.A.'s obligations assigned to it as a part of the spin-off. Part II Description of elements of property, permits, concessions and relieves vested in Pekao S.A. 1. Key principles for separating the elements of BPH S.A.'sproperty to be vested in Pekao S.A. As part of the spin-off, Pekao S.A. shall obtain certain assets and liabilitiesof BPH S.A. constituting an organized part of the enterprise consisting in thebranches of BPH S.A. specified in Table 2 and all new branches created afterOctober 1, 2006 (the "Transferred Branches"), the corporate centers specified inTable 3 (the "Corporate Centers"), the macroregions specified in Table 4 (the"Macroregions"), part of BPH S.A.'s head office (the "Head Office") and part ofBPH S.A.'s brokerage house (the "Brokerage House"). The Transferred Branches,Corporate Centers, Macroregions and the part of the Head Office and theBrokerage House vested in Pekao S.A. are hereinafter referred to as the"Transferred Units". The key principle adopted in determining which elements of BPH S.A.'s property,as the spun-off Company, should be vested in Pekao S.A. as the survivingCompany, is to ensure that Pekao S.A. obtains those elements that are related tothe business of the Transferred Units, with the assumption that the TransferredUnits shall be equipped with all elements of fixed assets and equipment used intheir business. This principle also applies to all rights, obligations,receivables and liabilities, administrative decisions and permits related to thebusiness conducted by the Transferred Units. With respect to certain property elements vested in Pekao S.A., theirrelationship with the Transferred Units for the purposes of the spin-off hasbeen defined along additional criteria more specifically described below and inthe Tables. The determination of which property elements should be vested in Pekao S.A. isbased on accounting records kept pursuant to the rules prevailing in BPH S.A. Together with the Transferred Units, Pekao S.A. shall obtain the rights,obligations receivables and liabilities under agreements concluded with clientsto be vested in Pekao S.A., together with all rights, obligations, receivablesand liabilities related to such agreements. Additionally, Pekao S.A. shallobtain: 1) the rights, obligations, receivables and liabilities related to theprovision of the services referred to in Section 2.2 below; 2) the rights, obligations, receivables and liabilities underagreements concluded with the business partners of the Transferred Units,together with all rights, obligations, receivables and liabilities related tothese agreements; 3) administrative decisions, permits, concessions, relieves, licenses,programs, trademarks, copyright and claims and liabilities in court,administrative and arbitration proceedings, as described in detail below. The employees of BPH S.A. employed in the Transferred Units shall be transferredto Pekao S.A. pursuant to Art. 231 of the Labor Code of June 26, 1974 (the"Labor Code"). The detailed principles of transferring the BPH S.A. employees toPekao S.A. are described below in Section 5. 2. Property elements The property elements vested in Pekao S.A. as part of the spin-off have beendescribed below as at October 1, 2006. This condition may change by the Spin-offDate, because BPH S.A. continuously conducts its regular business, and becauseof applying the principles referred to in Part I Section 2.3 of this Spin-offPlan. Some assets vested in Pekao S.A. and discussed below that do not have anygenerally accepted Polish equivalents in the capital market as well as thebanking market are denoted in English. Whenever used herein, credit agreements shall also mean loan agreements, cashloans, guarantees, civil law-based sureties, limits on cards with deferredrepayment, import letter of credits and other similar agreements, includingnotes guarantees (aval). In this Spin-off Plan, the bank shall mean a domesticbank, a foreign bank and a banking institution within the meaning of the Act ofAugust 29, 1971, the Banking Law. 2.1. Cash assets 2.1.1. The cash assets vested in Pekao S.A. include: 1) cash in foreign currencies in BPH S.A.'s accounts with other banks,except for the National Bank of Poland (funds in foreign currency NOSTROaccounts) in amounts equal to the proportion of foreign currency balances in thecurrent accounts of the clients whose agreements are assigned to Pekao S.A. tothe total of foreign currency balances of BPH S.A.'s clients; 2) cash (notes and coins) in the Transferred Branches; 3) cash (notes and coins) with outsourced cash counting and sortingservices providers, including: a) cash balances in the Transferred Units; b) cash balances received from clients pursuant to agreementsassigned to Pekao S.A.; c) part of the cash balances in those entities, calculated with theuse of the following formula: other cash assigned to Pekao S.A. = G unassigned *G Pekao/ (G Pekao + G BPH); where: G Pekao is the cash in Transferred Units and accepted from clients pursuant toagreements assigned to Pekao S.A.; G BPH is the cash in units other than Transferred Units and accepted fromclients pursuant to agreements not assigned to Pekao S.A.; and G unassigned is all remaining cash in outside entities; and 4) balances of cash (znaki pieniezne) in the ATMs transferred to PekaoS.A. 2.1.2. The Companies confirm that the cash assets in PLN and foreigncurrencies deposited in NOSTRO accounts with the National Bank of Poland as atOctober 1, 2006 shall remain with BPH S.A. and shall not be assigned to PekaoS.A., subject to the principles set out in Section 2.3 of Part I hereof. 2.2. Rights, obligations, receivables and liabilities inrelationships with clients 2.2.1. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities towards retail clients (individuals and SME-qualifyingentrepreneurs, other than Corporate Clients, as defined below), pursuant to thefollowing principles: 1) with respect to the clients who have a savings & checking account(ROR) or current account kept in a Transferred Branch (being an account recordedin the IT operating system of BPH S.A. at the Cost Center of the TransferredBranch), Pekao S.A. shall assume the rights, obligations, receivables andliabilities related to all agreements concluded by BPH S.A. with such clients(further referred to as clients assigned to the Transferred Branch), except forthe items listed below; 2) with respect to the clients who have a savings & checking account(ROR) or current account kept in a branch other than a Transferred Branch, PekaoS.A. shall not obtain any rights, obligations, receivables or liabilities underagreements concluded by BPH S.A. with such clients, except as specified below; 3) with respect to BPH S.A. clients that have at least one ROR accountor current account in the Transferred Branches and at least one ROR or currentaccount in branches other than Transferred Branches, such client shall be deemeda client of the branch in which his/her first ROR or current account was opened; 4) with respect to the clients who have no ROR or current account withBPH S.A., Pekao S.A. shall assume the rights, obligations, receivables andliabilities under the agreements concluded by such clients with BPH S.A. in theTransferred Branches, except as specified below; 5) no rights, obligations, receivables or liabilities under agreementsentered into by BPH S.A.'s clients with the Housing Fund (Kasa Mieszkaniowa BPHS.A.) shall pass to Pekao S.A.; 6) Pekao S.A. shall obtain the receivables related to unpaidliabilities towards BPH S.A., under credit agreements associated with theTransferred Branches pursuant to the provisions of this Section 2.2.1, includingthe terminated agreements; out of these receivables, Pekao S.A. shall not obtainany receivables that have been transferred to off-balance sheet records uponbeing written-off to provisions for such receivables / revaluation write downspursuant to the provisions of Ss24 Section 7a of the Ordinance of the Ministerof Finance of December 10, 2001 regarding special accounting principles in banks(Journal of Laws No. 149, Item 1673, as amended), that have not been securitizedpursuant to an agreement concluded by Bank BPH S.A. with Blue Ridge Investments,L.L.C. and BPH Towarszystwo Funduszy Inwestycyjnych S.A. on June 7, 2006; 7) with respect to the rights, obligations, receivables andliabilities under agreements related to structured deposit certificates (SDC),only the agreements concluded by BPH S.A.'s clients in the Transferred Branchesshall be assigned to Pekao S.A., regardless of whether the client is assigned toa Transferred Branch or not; 8) irrespective of the principles set forth above, the followingrights, obligations, receivables and liabilities of BPH S.A. shall be obtainedby Pekao S.A.: a) those resulting from credit agreements concluded by BPH S.A. withclients through Powszechny Dom Kredytowy, whether or not these clients areassigned to the Transferred Branches; b) those resulting from credit and bank account agreements concludedwith clients through agents representing BPH S.A., whether or not these clientsare assigned to the Transferred Branches; c) those related to actions performed by clients of Western Union. 2.2.2. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities under agreements, other legal transactions and events transacted byor related to all Corporate Clients, subject to the principles set forth inSections 2.2.3 through 2.2.8 and Sections 2.4 through 2.8 below. The term"Corporate Client" means each client recorded in BPH S.A.'s operating and ITsystems as a Corporate Client. The term "Corporate Client" shall also mean banksand any other financial institutions, except for the National Bank of Poland andthe Bank Guarantee Fund. 2.2.3. Pekao S.A. shall not obtain any of the rights, obligations,receivables and liabilities related to an agreement between BPH S.A. and theState Treasury regarding the role of a treasury securities broker. 2.2.4. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities related to the agreements, other legal transactions and eventsrelated to client credit facilities and their repayment, including in relationto settlements related to the liquidation of Bank Handlowo-Kredytowy S.A. wKatowicach w likwidacji. 2.2.5. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities under other legal transactions and events related to the TransferredUnits. 2.2.6. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities resulting from the agreements concluded with the agents of BPH S.A.,irrespective of whether the agent is a client assigned to a Transferred Branch. 2.2.7. Pekao S.A. shall also obtain the collaterals established underagreements that are transferred to Pekao S.A. 2.2.8. Pekao S.A. shall obtain the receivables related to unpaidliabilities of the Corporate Clients towards BPH S.A., including those relatedto terminated agreements. Out of these receivables, Pekao S.A. shall not obtainthe receivables that have been transferred to off-balance sheet records uponbeing written-off to provisions for such receivables / revaluation write downspursuant to the provisions of Ss24 Section 7a of the Ordinance of the Ministerof Finance referred to in Section 2.1 item 6 above, that have not beensecuritized pursuant to the agreement referred to in Section 2.1 item 6 above. 2.2.9. The principles set forth in Section 2.2 shall also apply to newagreements and other legal transactions and events described in Sections 2.2.1to 2.2.8 above, entered into or occurring prior to the Spin-off Date. 2.3. Brokerage house Pekao S.A. shall obtain the rights, obligations, receivables and liabilitiesunder agreements concluded in the course of conducting the business of theBrokerage House, except for the rights, obligations, receivables and liabilitiesof the clients assigned to branches other than the Transferred Branches. PekaoS.A. shall also obtain assets and liabilities comprising: 1) the Brokerage House's own assets, except for the own assetsdesignated by BPH S.A. for brokerage activities pursuant to the Ordinance of theCouncil of Ministers of April 14, 2006 concerning the scope and detailed termsof determining capital requirements and the maximum amount of credit, loans anddebt securities issues in relation to capital (Journal of Laws No. 67 item 479)to the extent indispensable for the continued provision by BPH S.A. of brokerageservices; the exception also includes the proceeds accumulated on the settlementfund and the mandatory compensation system managed by the NDS in the amountrequired pursuant to the aforementioned Ordinance; 2) securities recorded in the accounts kept with the Brokerage House,attributable to the clients whose agreements are assigned to Pekao S.A. 2.4. Rights, obligations, receivables and liabilities towards banksunder interbank deposit agreements 2.4.1. Pekao S.A. shall obtain the following rights, obligations,receivables and liabilities under deposit agreements concluded on the interbankmarket: 1) Liabilities: a) short term, mid-term and long term deposits in PLN and in foreigncurrencies placed by other banks with BPH S.A.; b) call accounts in PLN and foreign currencies kept by BPH S.A. forother banks; 2) Receivables: a) short term, mid-term and long term deposits in PLN and foreigncurrencies placed with other banks by BPH S.A.; and b) call accounts in PLN and foreign currencies kept by other banksfor BPH S.A. 2.4.2. Out of the rights, obligations, receivables and liabilities referredto in Section 2.4.1 above, Pekao S.A. shall not obtain the rights, obligations,receivables and liabilities related to: 1) bank account agreements of the Housing Fund Kasa Mieszkaniowa BPHS.A.; 2) deposits placed by BPH S.A. with other banks and the depositsplaced with BPH S.A. by other banks, or parts of these deposits which allow thebalancing of assets and liabilities and facilitate liquidity risk hedging forBPH S.A. units other than the Transferred Units until the Spin-off Day; and 3) bank account agreement for the Company's Social Benefit Fund of BPHS.A., subject to Section 5 below. 2.5. Long-term loans from foreign banks and credit institutions Pekao S.A. shall obtain the rights, obligations, receivables and liabilitiesunder long-term credit agreements concluded by BPH S.A. as the borrower withforeign banks and credit institutions with respect to financing loans granted toclients. 2.6. Debt securities 2.6.1. Pekao S.A. shall obtain debt securities in BPH S.A.'s possession,except for the following: 1) the debt securities of the Housing Fund Kasa Mieszkaniowa BPH S.A.;and 2) the debt securities purchased by BPH S.A. pursuant to a decision ofthe Management Board of the National Bank of Poland dated August 27, 1999releasing Powszechny Bank Kredytowy S.A. w Warszawie, and later BPH S.A. as itslegal successor, from the obligation to maintain a statutory reserve. 2.6.2. The debt securities vested in Pekao S.A. as at October 1, 2006 isprovided in Table 5. 2.7. Debt securities issued by BPH S.A. 2.7.1. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities related to the debt securities issued by BPH S.A. by the Spin-offDate, except those related to: 1) structured deposit certificates with underlying agreementsconcluded in any branches other than the Transferred Branches; and 2) two promissory notes drawn by BPH S.A. on the basis of an agreementbetween the National Bank of Poland and BPH S.A. as the legal successor ofPowszechny Bank Kredytowy S.A. dated December 27, 1999, regarding therehabilitation of Pierwszy Komercyjny Bank w Lublinie S.A. 2.7.2. The debt securities issued by BPH S.A. vested in Pekao S.A. as atOctober 1, 2006 are provided in Table 6. 2.8. Foreign exchange transactions and derivatives 2.8.1. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities related to foreign exchange transactions and derivatives to whichBPH S.A. is a party, except those related to: 1) Interest Rate Swap contracts or parts of contracts, concluded withpartners on the interbank market as a hedge of the interest margin for the modelportfolios remaining in BPH S.A., that is replicated deposit portfolio and theprofitability of capital portfolio; 2) transactions or parts of foreign exchange and derivativetransactions concluded with partners on the interbank market as a hedge forliquidity or market risks for units other than the Transferred Units; and 3) foreign exchange and derivative transactions (including optionsembedded in structured deposit certificates) based on contracts concluded withthe clients of branches other than the Transferred Branches, subject to theprovisions of Section 2.2.1, item 7 above, and the corresponding closingtransactions, as well as the corresponding parts of foreign exchange andderivative transactions concluded with partners on the interbank market. 2.8.2. The transactions referred to in Section 2.8.1 items 1 - 3 aboveshall satisfy the criteria of compensating for a change in the hedged position. 2.8.3. A list of the derivative instruments vested in Pekao S.A. as atOctober 1, 2006 is provided in Table 7. 2.8.4. The rights, obligations, receivables and liabilities under newderivative instruments to which BPH S.A. becomes a party before Spin-off Dateshall be vested in Pekao S.A. pursuant to the principles set forth in thisSection 2.8, including the provisions of Section 2.8.1 items 1 - 3, and Section2.8.2 above. 2.9. Rights and obligations, liabilities and receivables withpartners and third parties 2.9.1. Pekao S.A. shall obtain rights, obligations, receivables andliabilities under the following agreements with business partners: 1) agency agreements with BPH S.A. agencies; 2) agreements involving real estate to be vested in Pekao S.A. andrelated solely to the functioning of the Transferred Units, such as utilitysupplies agreements and all other services provided in relation to the realestate of the Transferred Units and the installations, appliances and otherequipment located thereon or related thereto; and 3) the agreements listed in Table 8. 2.9.2. Pekao S.A. shall obtain the rights, obligations, receivables andliabilities related to other legal transactions and events with businesspartners and third parties related to the Transferred Units. 2.9.3. The principles set forth above shall apply to rights, obligations,liabilities and receivables resulting from new agreements, other legaltransactions and events specified in this Section 2.9, concluded or occurringuntil the Spin-off Date. 2.10. Shares The shares (akcje and udzialy) to be vested in Pekao S.A. as at October 1, 2006are provided in Table 9. All new shares acquired by BPH S.A. until the Spin-offDate shall be vested in Pekao S.A. This principle shall not apply to BPH S.A.acquiring shares in BPH Towarzystwo Funduszy Inwestycyjnych S.A., with itsregistered office in Warsaw. 2.11. Tangible fixed assets and equipment 2.11.1. Real estate A list of the real estate owned (also on the basis of cooperative ownershiprights) or perpetually usufructed by BPH S.A. and which shall be transferred toPekao S.A. is provided in Table 10. A list of lease agreements (najem) in respect of real estate to which therights, obligations, receivables and liabilities shall be assigned to Pekao S.A.is provided in Table 11. The real estate assigned to Pekao SA shall mean in this Spin-off Plan the realestate to which Pekao SA has the rights as specified above. All other rights, obligations, receivables and liabilities vested in BPH S.A.and existing on the Spin-off Date, related to the real estate assigned to PekaoS.A. shall be vested in Pekao S.A. with this real estate and the rights thereto. 2.11.2. Equipment Pekao S.A. shall obtain equipment assigned to the Transferred Units pursuant tothe relevant property records, subject to the exceptions discussed below. The equipment assigned to the employees of the Transferred Units (as per therelevant property records) who shall be transferred as employees to Pekao S.A.,shall be vested in Pekao S.A. The equipment assigned to the employees at theHead Office and the Brokerage House, which are to be transferred to Pekao S.A.and which equipment is functionally related to their responsibilities, shall bevested in Pekao S.A. The above rules do not apply to IT equipment. IT equipment (designated as IT inBPH S.A.'s operational and IT systems) shall be divided based on records andbased on the designated use criteria; that is, taking into account: - the share of the given element of property in the provision ofcentralized IT services indispensable to the operation of BPH S.A. or theTransferred Units; - the use of the given element of property by the Transferred Unit; and - the use of the given element of property as personal or an office toolby a BPH S.A. employee, taking into account the ratio of the number of employeesbeing taken over by Pekao S.A.; subject to the following principles: 1) Pekao S.A. shall obtain the IT equipment located in or used by theTransferred Branches, Corporate Centers and Macroregions. This refers inparticular to Windows Servers, WAN and LAN equipment, personal computers withperipherals, printers, cashiers' equipment, telecommunication devices and othersundry IT equipment, except for the IT equipment located in or used by theTransferred Branches, Corporate Centers and Macroregions that shall not be usedby Pekao S.A. after the migration and which shall remain with BPH S.A. (such asProfile and Lotus Notes servers, back-up making equipment); 2) Pekao S.A. shall also obtain the IT equipment located in thepremises of the Head Office and the Brokerage House assigned to Pekao S.A. (thisrefers to WAN telecommunication equipment, LAN equipment, telephone equipmentand other IT equipment, save for the equipment related to the central systemsthat remain in BPH S.A.); 3) The desktop IT equipment (such as personal computers withperipherals, local printers) assigned to the employees of the Head Office andthe Brokerage House that shall be employed by Pekao S.A. - shall be assigned toPekao S.A. Pekao S.A. shall also obtain equipment, except for equipment permanentlyattached to real estate, related to the business conducted by the CorporateCenters and Macroregions located on real estate that is not assigned to PekaoS.A. 2.11.3. Other fixed assets The tangible fixed assets under construction and expenditures on intangibleassets shall be vested in Pekao S.A. pursuant to principles analogous to thoseset forth in Sections 2.11.1 and 2.11.2 above. Pekao S.A. shall obtain the rights, obligations, receivables and liabilities ofBPH S.A. under financial lease agreements regarding tangible fixed assetsconcluded by BPH S.A. as the lessee which have a functional link with theTransferred Units or, with respect to the Head Office and the Brokerage House,pursuant to the employee transfer rules set forth in Section 5 below. The rights, obligations, receivables and liabilities resulting from lease (najemand dzierzawa) agreements, pursuant to which components of BPH S.A.'s tangiblefixed assets were provided for use by third parties, shall be transferred toPekao if the real estate in which such assets are located is transferred toPekao S.A. 2.12. Foreclosed assets Pekao S.A. shall obtain the real estate, movables and other rights foreclosed byBPH S.A. as a result of executing any collaterals granted to BPH S.A. inrelation to the agreements concluded by PBH S.A. in the course of business ofthe Transferred Units. 2.13. Licenses Pekao S.A. shall obtain the rights, obligations, receivables and liabilitiesunder the following license agreements: 1) related to central systems of BPH S.A. necessary for use in PekaoS.A. that shall not be used by BPH S.A. in relation to transferring theTransferred Units to Pekao S.A.; 2) related to the Transferred Branches, save for the rights,obligations, receivables and liabilities under licenses related to Profile andLotus Notes servers and the back-up system that remain with BPH S.A.; 3) related to "Enterprise" license agreements, such as SymantecAntivirus and Microsoft Windows (including Windows Server and MS Office) in anumber proportional to the number of the Transferred Branches, or the number ofemployees moved to Pekao S.A.; 4) related to the IT equipment assigned to Pekao S.A. pursuant toSection 2.11.2, item 2 above; 5) related to sundry IT software, such as MS Project and Visio, usedby the Transferred Branches, Corporate Centers and Macroregions; and 6) related to the sundry IT software assigned to employees of the HeadOffice and the Brokerage House in a number proportional to the number ofemployees moved to Pekao S.A. 2.14. Trademarks Pekao S.A. shall obtain the rights, obligations, receivables and liabilitiesunder the trademarks referred to in Table 12. 2.15. Copyright The rights, obligations, receivables and liabilities resulting from thecopyrights specified in Table 13 shall be vested in Pekao S.A. 3. Administrative decisions, permits, concessions, relieves As a part of the spin-off, Pekao S.A. shall obtain the administrative decisions,permits, concessions and relieves granted to BPH S.A. necessary for theactivities of the Transferred Units, including in particular those listed inTable 14. In addition, new administrative decisions, permits, concessions orrelieves related to the operation of the Transferred Units granted or issuedbefore the Spin-off Date shall also be vested in Pekao S.A. 4. Tax receivables and liabilities The rights, obligations, receivables and liabilities on account of taxes andother public imposts concerning the Transferred Units shall be allocated toPekao S.A., including those arising before the Spin-off Date. 5. Employees In relation to separating the elements of BPH S.A.'s property and vesting it inPekao S.A., some of BPH S.A.'s employees shall be transferred to Pekao S.A. andothers shall remain with BPH S.A. The legal standing of the employeestransferred to Pekao S.A. is determined by Art. 231 of the Labor Code. The employees employed at the Transferred Branches, Corporate Centers andMacroregions shall be transferred to Pekao S.A. Pekao S.A. shall become a party to employment relationships with those employeesof the Head Office and the Brokerage House who on the Spin-off Date shall be incharge of the tasks and perform the duties functionally related to the portionof the Head Office and the Brokerage House allocated to Pekao S.A. The funds from BPH S.A.'s Social Benefits Fund shall be split between BPH S.A.and Pekao S.A. pursuant to the provisions of Art. 7 Section 3b - 3d of the Acton Social Benefits Funds of April 4, 1994. The rights, obligations, receivables and liabilities under loan agreementsfunded from the Social Benefits Fund and concluded with BPH S.A.'s employeestransferred to Pekao S.A., pursuant to the provisions of Art. 231 of the LaborCode shall be assigned to Pekao S.A. together with these employees. Retired employees and pensioners employed at the Transferred Branches, CorporateCenters and Macroregions prior to the termination of their employmentrelationships shall acquire in Pekao S.A. the rights to benefits as provided forin the regulations binding in Pekao S.A. 6. List of court proceedings Pekao S.A. shall obtain the claims and liabilities related to the operations ofthe Transferred Units that are subject to court proceedings, includingenforcement proceedings, administrative and arbitration proceedings, pending orconcluded on the Spin-off Date. A list of court proceedings as at October 1,2006, is provided in Table 15. 7. ATMs Pekao S.A. shall obtain the right to use BPH S.A.'s ATMs situated in thelocations specified in Table 16. Should any new ATMs be installed in theTransferred Units or for the purposes of the Transferred Units, all assetsrelated to those ATMs shall be vested in Pekao S.A. Additionally, Pekao S.A. shall obtain the rights, obligations, receivables andliabilities related to the agreements for the lease (najem) of the floor spacewhere the ATMs vested in Pekao S.A. are located, and any improvements effectedtherein, together with the property elements connected thereto. Appendixes: Pursuant to provisions of Art. 534 Ss2 of the CCC, the following documents havebeen appended hereto: 1) Draft resolution of the General Meeting of Pekao S.A. regarding theintegration of Pekao S.A. with BPH S.A. performed by the spin-off of BPH S.A.through the transfer of a part of BPH S.A.'s property in the form of anorganized part of an enterprise to Pekao S.A. 2) Draft resolution of the General Meeting of BPH S.A. regarding theintegration of BPH S.A. with Pekao S.A. performed by the spin-off of BPH S.A.through the transfer of a part of BPH S.A.'s property in the form of anorganized part of an enterprise to Pekao S.A. 3) Draft amendments to Pekao S.A.'s Statute. 4) Determination of the value of BPH S.A.'s property as of October 1, 2006. 5) Declaration on the accounting status of BPH S.A. made for the purposes ofthe spin-off as of October 1, 2006. 6) Declaration on the accounting status of Pekao S.A. made for the purposesof the spin-off as of October 1, 2006. On behalf of On behalf of Bank Polska Kasa Opieki Bank BPH Spolka Akcyjna Spolka Akcyjna Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/1861m_-2006-11-16.pdf This information is provided by RNS The company news service from the London Stock Exchange END